The agricultural industry, willing to struggle against poverty... and to join the Mercals

The Venezuelan agricultural industry sector has decided to sum up efforts to struggle against poverty, and thus curb the malnutrition index in the country. The new president of the Venezuelan Chamber of the Food Industry (Cavidea), Pablo Baraybar informed that they are willing to participate in the social programs carried out by the government through the Mercal stores (Mercados de Alimentos), an initiative intended to supply basic necessities at low costs. The Mercal Mission was initiated last year, as an alternative to private commerce, which proved insufficient due to the general strike between December of 2002 and February of 2003.

These establishments, patronized by the government through the recently created Ministry of Food, constitute a distribution network of basic necessities like beef, chicken, sardines, tuna, powder milk, pasta, rice, margarine, black beans, cooking oil, sugar, and coffee, among other products; with discounts up to 50% of the price in the rest of the market. Most of these stores are located in shanty towns and other areas with low income population. The government has created a fund of over 261000 U$ to supply goods and services to these popular supermarkets.

Throughout the year, president Chávez’ administration has subscribed agreements with Brazil, Colombia, Argentina, and Cuba for the purchase of food products that were scarce in Venezuela, such as beef, chicken, and beans. So far, the proportion of Mercal sales has been 60% imported products and 40% local production.

Therefore, the local agricultural industry is interested in raising its production capacity, in order to satisfy the local Venezuelan market and thus cooperate in the supply of products at low costs, while preserving the same quality of the items available in the private stores.

Pablo Baraybar, president of Cavidea and of Alimnetos Polar (the country’s largest food and beverage processing corporation), expressed that the private sector wishes to enter the Mercal business through a program that enables it to supply elaborate products, at low cost and with high nutritional value for the neediest sector of the population.
“There are governmental programs that are basically represented in the Mercal stores and in the Corporation of Agricultural Supply and Services, which will evidently solve a problem in the country; and we, as responsible businessmen, are going to participate in these plans”, said Baraybar.

Mercal reaches 30% of the population, while the government’s goal is to reach 15 million Venezuelans (60% of the population).
With this purpose, the president of Cavidea, an organization that gathers the local and transnational agricultural industries like Monaca, from the Gruma group; Cargill, Alfonzo Rivas y Compañía, Alimentos Polar,Kraft, Nestlé, Coposa, Bimbo, Paisa, Torondoy, and Alpina, among others, indicated that the businessmen participate and will continue participating in the governmental programs in order to elevate the living standard of the population.

Currently, the prices of at least 150 basic necessities, including chicken, beef, pasta, rice, sugar, coffee, cooking oil, salt, milk, cheese, canned tuna and sardines, soft drinks, mayonnaise, and ketchup, are under a price control regime that bans businessmen from selling them above the amount fixed by the national government in the Official Gazette.

According to Baraybar , if there is an agreement with the government to produce a list of low price products, then this control would not be necessary for the rest of the items sold in the supermarkets.
He explained that the agricultural industry would release a percentage of its total food production at low prices, especially for Mercal,. “Cavidea wishes to be the main actor in Mercal, and really wants the greatest percentage of items in these stores to be national products. We have everything that is necessary to be the adequate suppliers for Mercal in terms of price, quality, and nutritional value. We can even place traditional brands, recognized by the population in these stores”, he commented.

The companies are willing to provide the government with technical advice about the food product distribution and sale business, in view of the interest of the Chávez administration in creating processing plants for the production of sugar cane, corn , coffee, cooking oil, powder milk, and canned food.

Baraybar said that he is in favor of free demand and supply in the food sector in order to encourage healthy competition. He explained that he agrees with keeping prices low for the list of basic necessities that will be distributed in Mercals as well as in other stores. Under price control, some products are sold below their real production and commercialization costs, thus generating distortions in the sales chain.

“There are industries in which the government fixes the prices of the raw materials and at the same time imposes the price of the final product. Such is the case of the corn processing plants. This generates a big problem, because at the same time the price of corn has increased 92% for the producer, the increase for the final consumer has been only 60%, since the application of the price control” he explained.

Published in Quantum N.41